Court emphasizes limited scope of judicial review in tender matters and highlights public interest over procedural grievances
The Gauhati High Court, in a significant judgment, upheld the decision of the Government of Nagaland to award a contract under the Pradhan Mantri Gram Sadak Yojna (PMGSY) Scheme to a contractor despite allegations of procedural irregularities in the tender process. The decision came in response to a writ appeal filed by M/S Vertex Construction challenging the selection and award of the contract to another bidder.
The appellant, M/S Vertex Construction, alleged that the Quality and Cost Based Selection (QCBS) system was adopted in evaluating the bids without prior disclosure in the Notice Inviting Tender (NIT) or Standard Bidding Documents (SBD). They contended that this lack of transparency in the evaluation criteria led to an unfair advantage for the winning bidder, despite Vertex Construction being the lowest bidder (L-1).
The Bench, comprising Chief Justice Mr. Ashutosh Kumar and Justice Arun Dev Choudhury, emphasized that judicial review in tender matters is limited, particularly after the commencement of work. The Court noted that procedural irregularities do not automatically warrant the setting aside of contracts unless malafides, favoritism, or corruption are established. The judgment highlighted the importance of weighing public interest against procedural grievances before granting relief.
The judgment further clarified that although the adoption of the QCBS system was not disclosed in the tender documents, the decision to apply this evaluation method was made well in advance during a pre-bid meeting, which was not attended by the appellant. The Court found no evidence of malafide intentions or favoritism in the evaluation process and noted that the appellant had also participated in other tenders under the same scheme where the QCBS system was applied but failed to secure contracts.
The judgment referenced several Supreme Court decisions, emphasizing that semi-completed or substantially progressed contracts should not be interfered with unless there is evidence of malafide actions or fraud. The Court acknowledged the procedural lapse but highlighted that setting aside the contract at this stage would cause irreversible harm to public interest, particularly given the risk of losing central funding for the project.
In conclusion, the Gauhati High Court dismissed the appeal, while recording its disapproval of the tendering authority's conduct in not disclosing the evaluation criteria upfront. The Court issued prospective corrective directions for future tenders to ensure transparency in evaluation methodologies.
Bottom Line:
Judicial review in tender matters is limited, particularly after the commencement of work. Procedural irregularities in evaluation criteria, if not malafide or fraudulent, do not automatically warrant setting aside of contracts, especially when substantial public interest is involved.
Statutory provision(s): General Financial Rules, 2017
M/S Vertex Construction v. State of Nagaland, (Gauhati)(DB) : Law Finder Doc id # 2843379
